The turmoil surrounding New York Community Bancorp (NYCB) intensified again Thursday when it revealed the exit of CEO Thomas Cangemi, weaknesses in its internal controls and a tenfold increase in fourth-quarter losses to $2.7 billion.
Shares of the Hicksville, New York-based commercial real estate company fell 20% in after-hours trading.
The new disclosures are the latest development in a month-long saga that has roiled the lender that played savior just a year ago during the 2023 regional banking crisis. NYCB stock began falling on January 31 when it surprised analysts by cutting its dividend, allocating more to loan losses and reporting a quarterly net loss of $252 million.
Now the $114 billion bank, one of the 30 largest banks in the United States, says in a new filing that its fourth-quarter loss was revised to $2.7 billion due to a new goodwill impairment charge of $2.4.
It decided to bear the charge after the assessment, completed on February 23, concluded that “goodwill from historical transactions (2007 and earlier) is fully impaired as of December 31, 2023, as confirmed by the current market value of the company,” the bank said. He said in a filing Thursday.
The bank said separately that management “identified material weaknesses in the company's internal controls related to internal loan reviews, resulting from ineffective oversight, risk assessment and monitoring activities.”
It took the step of delaying the submission of its annual report so that it could “complete its assessment and planning work to address material weaknesses.”
Thursday's surprise revelations included a major change in leadership. Kangemi, who worked at the bank for 27 years, has “resigned” from his position, the bank said in a separate press release. He will remain on the board of directors.
He will be replaced by CEO Alessandro Dinello, who has been serving as president of the bank since February 6 after the board changed the bylaws so that Cangemi now reports directly to Dinello.
DiNello was previously CEO of Troy, Michigan-based Flagstar Bank, which was acquired by New York Commercial Bank at the end of 2022. He has served as non-executive chairman since the acquisition.
The decision to buy Flagstar and then absorb assets from failed Signature Bank in 2023 pushed the New York Mercantile Bank's assets above $100 billion, a threshold that has drawn intense scrutiny from regulators.
New York Commercial Bank said it was these tougher requirements that led to the decision to reduce its dividend and set aside more for future loan losses. It set aside $552 million, well above estimates, to account for vulnerabilities associated with office properties and multifamily apartments.
The New York central bank's troubles that began a month ago have raised greater concerns about the world of regional banking nearly a year after regulators seized control of three large mid-sized banks in the wake of a deposit run.
Other changes to the New York Mercantile Bank's board of directors were announced Thursday as well. The bank said that Marshall Lux, who has served as an independent director since 2022, has been appointed president of the bank, and that former president Hanif “Wally” Dahiya has resigned from the board.
“Although we have faced recent challenges, we are confident in the direction of our bank and our ability to deliver for our customers, employees and shareholders over the long term,” DiNello said in the press release. “The changes we are making to our Board of Directors and leadership team reflect a new chapter being implemented.”
David Hollerith is a senior reporter at Yahoo Finance covering banking, cryptocurrency, and other areas of finance.
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